1. This appeal has been filed by the Hitkarini Sabha, Jabalpur, against the order of the 2nd Additional District Judge, Jabalpur, dated 14-9-1957, on a reference made by the Collector, Jabalpur, under Section 18 of the Land Acquisition Act 1894 (hereinafter referred to as the Act), Another appeal (Misc. Appeal No. 16 of 1958) arising out of the same proceedings has been filed by the Corporation of the City of Jabalpur. Both these appeals are disposed of by this order.
2. Plots Nos. 670, 671 and 735, situate inMadan Mahal Extension Area, Jabalpur, were acquired by the State Government under the Act forconstructing the Home Science College. PlotsNos. 670 and 671 were partly occupied by structures. A notification under Section 4 of the Actwas issued on 2-3-1955 with respect to the vacantplot. Along with this notification, another notification under Section 17(4) was also issued stating that the site was urgently needed and therefore the provisions of Section 5A were dispensed with..
Thereafter, a notification under Section 6 was issued with respect to this plot. Similarly, a notification under Section 4 of the Act was issued on 2-3-1955 with respect to the portions on which the structures stood and objections were invited under Section 5A. The objection filed by the Hitkarini Sabha was rejected and the notification under Section 6 of the Act was issued on 19-7-1955. The sites with the structures were finally acquired by the State Government.
The Collector fixed the compensation for the vacant land at -/8/- per sq. ft. and valued the structures. The Collector gave the compensation with respect to plot No. 670 wholly to the Hitkarini Sabha. Both the parties asked for a reference to be made under Section 18 of the Act and the 2nd Additional District Judge, Jabalpur, decided the reference by the order which is under appeal. The learned Judge raised the compensation for the vacant area to -/10/- per sq. ft. and enhanced the value of the structures Slightly. The compensation with reference to plot No. 670 was apportioned between the two appellants equally.
3. Both the appellants challenged the compensation awarded as inadequate. They claimed that the Site should have been valued at Rs. 1/- per sq. ft. The Hitkarini Sabha, in addition, requested that the value of the buildings and the playground constructed both should be raised. Another dispute which arises between the appellants inter se is about the apportionment of the compensation money--each claiming the whole of it.
4. We will first consider the question whether the learned Additional District Judge has valued the lands adequately. Before we do that we dispose of a preliminary objection which has been taken by the appellants. They have pointed out that Section 17(4) of the Act has no application to the present case, as the lands were not 'waste' or 'arable' and therefore the acquisition itself is void. We have already mentioned that two separate notifications under Section 4 with respect to the site built upon and the vacant site were issued. There is no substance in the objection that the area built upon could not be acquired under Section 17(4) of the Act, as this has not actually been done. It was open to the State Government to divide the plots in this manner and the contention that the whole plot should have been dealt with as a plot occupied by structures is without any merit
5. Further, We may observe that the scope of an appeal from a decision on a reference under Section 18 of the Act is very limited, just as the scope of the reference itself is limited. Under Section 18, the reference is made only on the four points indicated therein. The validity of the order of acquisition or want of jurisdiction in making the order is not a matter on which the Additional District Judge could adjudicate.
The powers of an appellate Court are restricted to the same powers which the original Court exercises, and therefore we are also not entitled to decide about the validity of the order of acquisition. The validity of these orders can be challenged only in a suit and in proper cases by a writ. (See Dinshaw v. State of Hyderabad, (S) AIR 1955 Hyd. 203).
6. This brings us to the question of valuation of the site acquired. The Collector had taken averages of 107 sales which took place during the three years before the acquisition and on that basis came to the conclusion that the site is worth -/8/- per sq. ft. The learned Additional District Judge has remarked that some of these plots He at a distance from the acquired land and do not therefore form a correct guide about the prices in the locality in which the acquired land lies.
He has referred to seven sales which took place in the Wright Town area where these lands e. The average price of these lands works out to -/9/4 per sq. ft. We agree that the average price of these adjacent lands can be taken into consideration to make a fair assessment of the price of the acquired lands. It appears from the statement of Chandrika (A. W. 1), who is a property agent, that some plots in the neighbourhood have been sold at -/12/- per sq. ft. J. P. Mishra (N. A. W. 3) states that he purchased a plot measuring 8308 sq. ft, lying near the land acquired, for Rs. 6500/-.
The price given by him is also material in determining the question before us. The appellants led great stress on two purchases respectively made by S. D. Shukla (N. A. W. 3) on 8-3-1956 and Shrivastava (N. A. W. 2) on 3-7-1956. These purchases were made about a year after the date of acquisition and the learned Additional District Judge has observed that the prices had risen by that time. From the evidence adduced, it appears to us that the actual price of plots sold near about was about -/12/- per sq. ft.
7. We may observe that the two witnesses relied upon by the appellants purchased small plots at the rate of Re. 1/- per sq. ft. As the map of the Wright Town Madan Mahal Extension Area produced by the Corporation before us shows, these plots are in a fully developed lay out having roads and drains round about. We had asked the Corporation to calculate how much area out of the acquired sites would be required to be left open for roads and drains and they have calculated that about 70,000 sq. ft. would have to be left open for this purpose.
Obviously, therefore, it is only the remaining plot which would have value as building sites. Besides leaving so much area open, costs will have to be incurred in developing the roads and drains for which the Corporation has estimated the cost to be Rs. 8500/-. Considering all these factors and also calculating the built up area in the lay outs surrounding the acquired land, we find that it is only eighty per cent of the land which can be sold as building site.
8. On these calculations if the average price of the plots sold in the locality is taken to be -/12/- per sq. ft., the overall price of the acquired land without roads and drains would work out to a little less than -/9/- per sq. ft. To put the matter in a different way, the value of -/10/-per sq. ft. found by the Additional District Judge would work out to a little over -/12/- per sq. ft., if only the area which could be built upon is considered saleable as building site. We therefore find that the price at -/10- per sq. ft. allowed by the Additional District Judge is not unreasonable; if anything it errs on the generous side.
9. The Hitkarini Sabha has asked for valuing the buildings and the playground at a higher figure. It was stated before us that the playground was developed at a cost of Rs. 10,000/-. The Sabha is maintaining accounts of expenditure and it was easy for them to produce them to show what they spent on the playground. The learned Additional District Judge found that only Rs. 2286/- were spent till 1954-55 on the playground. He has still allowed Rs. 3,000/- for it. Once again, his estimate of value is generous in favour of the Sabha.
As regards the value of the buildings, the learned Additional District Judge has not accepted the evidence of the engineers of the appellants and has relied upon the P.W.D. estimate. The Sabha did not 61e any accounts to show what expenses they actually incurred on construction. The valuation made is reasonable according to the evidence On record. We may incidentally mention that in the request for reference made to the Collector by the Sabha, no grievance was made regarding the valuation of the building being erroneous.
10. On the aspect of valuation of the lands acquired, we find that the amount fixed is more than adequate and no interference is called for.
11. Turning now to the dispute regarding the apportionment between the two appellants, it is necessary to advert to certain facts. Plot No. 670 was given to the Hitkarini Sabha by the Corporation by a lease deed, dated 31-8-1940, for the purpose of locating a college and using the land for other incidental purposes connected with the college. At the time when the lease was executed the Municipal Committee had been superseded under Section 57 of the C.P. and Berar Municipalities Act, 1922, and an Administrator was appointed to manage the affairs of the committee. The lease deed is executed by the Administrator. The following clauses in the lease deed were specifically referred to at the time of arguments:
'(2) That the lessee shall pay the yeany rent of Rs. 5/- for 10 acres and Re. 1/- for dead strip total Rs. 6/- at the office of the Jubbulpore Municipality. The rent shall be liable to revision at every settlement so that it may be proportionate to the land revenue.
******(h) The lessee shall, on expiry of the period of this lease, be entitled to have the same renewed on such terms and conditions as may be agreed to between the parties.'
12. Shrt B. L. Seth has attacked the lease deed on two grounds. Firstly, he contends that the lease deed is of no effect in law as the Administrator had no power to transfer the lands. Secondly, as on account of the acquisition it has become impossible to carry on the purpose of the lease, the land must be treated as having reverted to the Corporation.
13. In Dagdulal v. Municipal Committee, Burhar, 1960 MP LJ 627 a Division Bench of this Court has interpreted Section 57 of the C.P. and Berar Municipalities Act and has held that so long as the municipal committee is not reconstituted, the ownership of the property stands transferred by operation of law to the Provincial Government and therefore an administrator has no power whatsoever to sell the property which has so vested.
The learned Additional District Judge observed that the lease deed relied upon by the Hitkarini Sabha was executed by the Administrator in puruance of a resolution which had already been made by the Municipal Committee while it was in office. The proceedings of the meetings held on 5-7-1934, 8-4-1938 and 13-6-1938 have been filed on record. It appears that on 5-7-1934 the Municipal Committee had decided to grant a lease of the lands to the Hitkarini Sabha.
The matter could not be finalized for some reasons and on 8-4-1938 it was again reconsidered. On that date, the proposal for granting a lease was objected to as the necessary majority of two-thirds of the total members was not present. Shri B. C. Verma, a member, then proposed that a licence be granted. Even this resolution could not be passed, as there was no quorum.
In the adjourned meeting held on 13-6-1938 the proposal of Shri B. C. Verma was put to vote and carried., A perusal of these proceedings shows that the final resolution, which was carried by the committee, was only to grant a licence and not a lease. The observation of the Addl. District Judge that the lease was executed in pursuance of a resolution of the committee is therefore incorrect.
14. Thereafter, on 1-11-1939 an application was made by the Hitkarini Sabha again requesting for a lease. There is nothing on record to show regarding the orders passed on this application; but, we find that on 31-8-1940 the lease deed relied upon by the Hikarini Sabha was executed. In view of the decision in Dagdulal's case, 1960 MP LJ 627 (supra), this lease deed is ineffective to convey lease-hold interests to the Hitkarini Sabha.
15. However, the Sabha had been paying rent at the stipulated rate of Rs. 6/- per year from 1940 to 1954. Further, as required by the terms of the lease deed, the Sabha applied for permission to the Municipal Committee for constructing buildings and such permission was granted. This was done after the Administrator handed over charge and the committee was regularly constituted. The acceptance of rent for a long period by the committee amounts to creation of a tenancy by necessary implication,
In a Full Bench decision of the Patna High Court, Bastacolla Colliery Co. v. Bandhu Beldar, AIR 1960 Pat 344, it has been held that although the possession of a lessee is wrongful from the time of his entry on, the basis of a void or invalid lease, but if he pays rent which is accepted by the lessor, a relationship of landlord and tenant comes into existence. In the instant case, there can be no doubt that the relationship of landlord and tenant was created by the acceptance of rent and the grant of permission to construct buildings by the Municipal Committee when it was regularly constituted and was capable of granting such a tenancy.
16. The next question that arises regarding the character of tenancy is whether it should be deemed to be an year to year lease or whether it should be deemed to be on the terms contained in the lease deed. It is true that if there is no agreement as to the duration of the lease, or if such an agreement cannot be proved, the tenancy must be construed in accordance with the provisions of Section 106 of the Transfer of Property Act.
However, in the instant case, there is a con-tract to the contrary. We may point out that the lease deed, which was executed in 1940, was duly registered and is admissible in evidence. This case stands on a different footing from those leases which are unregistered and whose terms cannot be proved for that reason. The lease granted to the Hitkarini Sabha is attacked here only on the ground of lack of power in the Administrator to effect the transfer. That defect is cured by the acceptance of rent by the Municipal Committee subsequently.
The Committee must have been aware of the existence of the lease by the Administrator when it accepted the rent and granted permission to the Sabha for constructing buildings. The rent was very nominal and the attention of the Committee must therefore have been attracted to this circumstance and the reason which led to the fixing of such a low rent. Further, the construction of the buildings normally implies grant of a lease for a substantial period and therefore when granting such permission the Municipal Committee must have realized that the lease was of such a duration. Under these circumstances, it must be held that the tenancy continued on the terms contained in the lease deed.
17. That being the position, it has now to be seen how the total Compensation awarded for the land should be apportioned between the two appellants. On behalf of the Corporation it is contended that as the grant was made for constructing a college and the object of the grant can no longer be fulfilled on account of the acquisition, the land must be deemed to have reverted to the Corporation and the whole compensation should be given to it. On behalf of the Sabha it is stated that under the lease deed the Corporation practically retained no interest in the property and could not derive any profit from the land. The lease was renewable in perpetuity and so long as the Sabha continued to have a college the Corporation had practically no interest in the land.
18. The lease deed in this case was executed on 31-8-1940 and was for a period of thirty years. It was therefore to remain in force for 15 years more after the date of acquisition. There is a renewal clause which has been already quoted above. The lessee is entitled for renewal 'on such terms and conditions as may be agreed to between the parties'. It appears to us that the clause is uncertain and vague and does not form a valid contract for renewal of the lease. Normally in a covenant for renewal there is an express agreement that the lease would be continued on the same terms and conditions subject to a reservation that the rent may be enhanced under certain circumstances.
In the instant case, ail the terms and conditions have been left to the agreement of parties which may not take place at all. Although a renewal is contemplated, no terms on which it can be granted have been fixed between the parties. Under Section 29 of the Indian Contract Act such a contract cannot be enforced. It has been held in Ramasami v. Rajagopala, ILR 11 Mad 200 that a lease whereby a tenant agreed to pay whatever rend the landlord might fix was void for uncertainty.
19. It is true that if the lease deed contains a covenant of renewal without anything more, the presumption is that the lease would be renewed on the same terms and conditions and for the same period as the original lease. (See Secy. of State v. A. H. Forbes, 16 Cal LJ 217 and Rasul Gazi v. Abdul Jalil Khan, 33 Ind Cas 450 : (AIR 1917 Cal 526)). However, this is not the position in the instant case. By express recital the matter has been left to the agreement of the parties which makes the clause void for uncertainty.
20. Reliance was placed by Shri R. S. Dabir on D. T. Mangalmurti v. State of Bombay, AIR 1959 SC 639 and it was contended that where the fixation of rent was left to the lessor, the Court could determine the proper amount of rent on which the renewal should be granted. The condition contained in the lease deed in that Case was that the renewal would be 'subject to such fair and equitable enhancement as the lessor shall determine'.
It was held that although the matter was left to the determination of the lessor, the amount had to be 'fair and equitable' in fact, and the matter thus became justiciable in Court. That decision does not help the Sabha in the present case, as the language of the covenant for renewal is quite different. In this view, it must be held that the lease was to continue for another 15 years only.
21. The question of apportioning the compensation between the landlord and tenant has been considered in several cases. In Laxmanrao v. Jagannath, 1941 Nag LJ 620 : (AIR 1942 Nag 32) it was observed that in the absence of any other evidence, the amount of compensation should be divided between the tenant and the landlord in accordance with the respective values of the interest of the tenant and the interest of the landlord in the land. The rough and ready rule of dividing the compensation in the ratio of ten annas to the landlord and six annas to the tenant was considered fair in that case. The Corporation relies upon this decision to claim ten annas share of the compensation- In Shama Prosunno Bose v. Brakoda Sundari Dasi, ILR 28 Cal 146 it was stated:-
'....the principle upon which the compensation money in cases of this class ought to be apportioned as between the landlord and tenant is as follows:-First, the Court must ascertain the amount of rent payable to the landlord and Capitalize that rent at so many years' purchase, the number of years' purchase depending upon the particular circumstances of each particular case. The landlord is at the outset entitled to that capitalized value but I think he is entitled to something more. There is, or in many cases may be, the chance of an enhancement of the then existing rent; he is entitled in my opinion to have the value of this chance of enhancement assessed, and to have a money value put upon it, and to take that money value out of the compensation awarded. It may in some, perhaps in many cases, be somewhat difficult to arrive at the true capitalized value to the landlord of this chance of enhancement, but it will be for the landlord who sets up such a claim to make it out and show what the true value is. I do not think the landlord can be entitled to anything more, nor have I heard it suggested that he can be. After thus providing for the claims of the landlord the balance ought to be paid to the tenant.'
The principle enunciated in this case was accepted in Dinendra Narain Roy v. Tituram Mukherjee, ILR 30 Cal 801.
22. There can be no doubt that the ratio in which the compensation money should be divided between the landlord and the tenant should be the ratio between their respective rights in the land acquired. An effort should therefore be made to as-certain their respective interests as far as possible and then to divide the compensation money proportionately. In the instant case, the Sabha was, entitled to retain the lands for 15 years and thereafter they were to revert to the landlord (Corporation).
The Sabha was thus to derive a certain profit annually from the land for the remaining period of the lease during which period the Corporation would get practically nothing therefrom. Thereafter, the Corporation would be entitled to enter on the land. The interest of the Sabha would be, equal to the capitalized value of an annuity running for 15 years and the interest of the Corporation would be the present value of the capitalized value payable 15 years hence.
23. Capitalization of values is usually made at the rate of interest at 5 per cent per annum which is the fair return expected of immoveable properties leased out on rent. The value of an annuity of Re. 1/- per annum for 15 years allowing interest on capital at 5 per cent comes to 10.380. This would be the value of the interest of the Hitkarini Sabha. The Corporation would get twentytimes the rent of the property, that is, Rs. 20/-after 15 years. The present value of Rs. 20/- payable after 20 years at 5 per cent per annum interest comes to 20x 4810 equal to 9.62.
These calculations have been made on the basis of annuity tables printed on pp. 90 to 98 of the Land Acquisition Manual of Madhya Pradesh, First Edn., 1951. It is thus found that the compensation money should be apportioned between the Sabha and the Corporation in the ratio of 1038: 962. Although the learned Additional District Judge did not give any reasons for dividing the amount equally between the two claimants, it appears on the basis of the calculations made above that the apportionment was roughly correct.
24. With regard to plot No. 670, the total compensation payable is Rs. 3,20,037/-. The amount spent on playground with 15 per cent extra, i. e., Rs. 3450/- has first to be set aside. The balance Rs. 3,16,587/- divided in the ratio 1038 : 962 gives Rs. 1,64,330/- for Sabha and Rs. 1,52,277/-for the Corporation.
The total amount payable to the Sabha thus comes to:
The amount payable to the Corporation comes to:
For plots Nos. 671 & 735
For plot No. 670
25. Section 28 of the Land Acquisition Actprovides for payment of interest at 6 per cent onthe amount allowed by the Court above the amountgranted by the Collector. The Court bas not Considered this provision at all. No doubt the awardof interest is discretionary but the discretion has tobe judicially exercised. The excess amount hasbeen with the Government all the time and we secno reason why interest should not be granted inaccordance with Section 28 of the Act. We directthat the State Government shall pay interest at6 per cent to the appellants on the amount bywhich the amount determined by Court exceeds theamount granted by the Collector. The interest shallbe calculated from the date on which the Collectortook possession of the land to the date when theamount is paid to the appellants or deposited inCourt.
26. As the amount of compensation has not been varied, we direct the appellants to pay the costs of these appeals to the respondents, each contributing in proportion to the compensation payable. The appellants shall bear their costs as incurred. With these modifications, both the appeals are dismissed.